Document Type : Research Paper
Authors
1 Assistant Professor of Economics, Department of Economics, Faculty of Management and Economics, Lorestan University, Khorramabad, Iran
2 Ph.D. in Economics, Department of Economics, Faculty of Management and Economics, Lorestan University, Khorramabad, Iran
Abstract
This study examines the determinants of the ecological footprint in the N11 countries—Bangladesh, Egypt, Indonesia, Iran, South Korea, Mexico, Nigeria, Pakistan, the Philippines, Turkey, and Vietnam—over the period 2000–2022. The main objective of the study is to test the N‑shaped Environmental Kuznets Curve (EKC) hypothesis and to analyze the role of natural resource rents and economic globalization, with particular emphasis on the heterogeneity of effects across different levels of environmental pollution. To achieve this objective, the Method of Moments Quantile Regression (MMQR) is employed for the 10th, 25th, 50th, 75th, and 90th percentiles, and to assess the robustness of the results, panel regression with Driscoll–Kraay standard errors is applied. The empirical findings provide strong evidence in favor of an N‑shaped relationship between economic growth and the ecological footprint. Specifically, in the early stages of development, GDP growth leads to increased environmental degradation; after passing the first turning point, a temporary reduction in pollution occurs; and ultimately, beyond the second turning point, further economic growth once again increases the ecological footprint. The results also reveal substantial heterogeneity in the impact of natural resource rents: this variable has a positive and statistically significant effect on the ecological footprint at lower pollution quantiles, but its magnitude diminishes as pollution levels rise and becomes insignificant at higher quantiles. In contrast, economic globalization exerts a negative and statistically significant effect on the ecological footprint across all quantiles, supporting the pollution halo hypothesis and rejecting the pollution haven hypothesis. The results from the Driscoll–Kraay model further confirm the robustness of these findings. Accordingly, the study recommends the adoption of environmental policies tailored to countries’ pollution levels, alongside energy transition, structural reforms, and the targeted use of economic globalization.
Introduction
Natural resources play a fundamental role in the economic sectors of every country. Proper utilization of these resources can significantly contribute to national economic development. The N11 countries, which are developing nations rich in natural resources, are expected to emerge as economic leaders in the near future (Shahbaz, 2019). These nations have maintained high levels of economic growth and industrialization, which in turn have increased energy demand, primarily supplied from non-renewable sources (Khan et al., 2022).
Consequently, non-renewable resources, while boosting GDP, simultaneously degrade environmental quality (Shehzad et al., 2022). Multiple studies have documented that natural resources are crucial for increasing GDP (Epo & Faha, 2020). Financial advancement facilitates infrastructure development, reduces poverty, and maximizes employment opportunities; however, rapid economic growth can have adverse effects on environmental quality (Zhou et al., 2024). Several countries have exploited natural resources excessively, leading to environmental degradation and climate deterioration (Danish et al., 2020). Research by Muhammad et al. (2021) confirmed that natural resource exploitation harms the environment in BRICS countries, while Shittu et al. (2021) found that natural resources and GDP growth contribute to an increasing ecological footprint in 45 countries. Similarly, Nathaniel et al. (2021) showed that resource dependence elevates greenhouse gas emissions.
Therefore, reliance on natural resources in N11 countries can be an obstacle to sustainable development. Nonetheless, studies by Shehzad et al. (2020, 2021) indicated that GDP growth can coexist with environmental sustainability, supporting the Environmental Kuznets Curve (EKC) hypothesis. Conversely, Narayan et al. (2016) found that EKC is valid only in a limited number of economies, suggesting no general consensus. Thus, highlighting the impact of natural resources on the environment, considering GDP growth in the N11 countries, is essential.
Alongside economic growth, globalization also plays a significant role in environmental degradation. Globalization intensifies trade and production, increasing energy consumption and environmental pressure. N11 countries are consuming large amounts of oil, coal, and gas, further contributing to climate deterioration (Zhou et al., 2024). The N11 countries—Egypt, Bangladesh, Indonesia, Mexico, Iran, Nigeria, the Philippines, Pakistan, South Korea, Vietnam, and Turkey—form a coalition with coordinated financial policies recognized by the IMF. While they are expected to lead global economic development, these nations currently face severe environmental challenges and rank among the most polluted countries. The Ecological Footprint (EF) index has generally increased in these countries over the study period (2000–2022), indicating that economic growth and development often come at the cost of environmental sustainability. For instance, South Korea’s EF rose from 4.39 to 4.53 global hectares per capita, reflecting high consumption and production patterns, followed by Iran and Turkey, with EF increases from 2.53 to 3.3 and from 2.54 to 2.95, respectively. Vietnam experienced a particularly sharp increase from 0.82 to 2.08. Conversely, Mexico reduced its EF from 2.52 to 2.01, while Pakistan and the Philippines maintained relatively low and stable EF levels (0.78 and 0.94, respectively).
This research emphasizes the importance of sustainable economic development in N11 countries, highlighting the environmental consequences of resource extraction. The study aims to identify the role of natural resources in environmental degradation, assess the contribution of globalization, and examine the N-shaped EKC hypothesis in these countries.
Questions
The main research questions are: (1) Does natural resource rent deteriorate environmental quality in N11 countries? (2) Can globalization improve environmental quality? (3) Does the N-shaped EKC hold in these countries?
Methods and Material
This study investigates the relationship between natural resource rent, globalization, GDP, and ecological footprint in N11 countries. Annual data for 2000–2022 were collected, excluding Nigeria due to data unavailability. GDP and natural resource rent data were obtained from the World Bank, while globalization and EF data were sourced from the KOF Institute and Global Footprint Network, respectively. Table 1 presents detailed variables and sources.
GDP represents per capita economic output, NAT captures income from natural resource exploitation, EG measures globalization through investment, trade, and technology interdependence, and EF evaluates environmental impact by quantifying required biological resources to support consumption and waste. All variables are logarithmically transformed for regression analysis. The model is defined as
(1)
(2)
Where i=1,…,N denotes countries and t=1,…,T denotes years. MMQR (Machado & Silva, 2019) was applied to estimate conditional quantiles at 10th, 25th, 50th, 75th, and 90th percentiles, allowing a detailed assessment of heterogeneous effects. Driscoll-Kraay panel regression was also employed to validate results under potential cross-sectional dependence and heteroskedasticity.
Results and Discussion
The MMQR results reveal an inverted N-shaped relationship between GDP and EF, confirming the N-shaped EKC hypothesis for N11 countries. The coefficients of lnGDP, lnGDP², and lnGDP³ were positive, negative, and positive, respectively, across all quantiles and in the Driscoll-Kraay panel model (β = 0.58, -1.91, 0.07). This indicates that environmental degradation initially rises with economic growth (scale effect), temporarily decreases with technological and efficiency improvements (composition and technique effects), but may increase again at very high income levels.
Globalization consistently exhibits a negative and significant effect on EF across all quantiles, with stronger reductions observed at higher EF levels (from -0.94 at the 10th percentile to -1.07 at the 90th percentile), suggesting that global integration promotes cleaner technology adoption and environmental standards.
Natural resource rents positively affect EF, especially in lower and middle quantiles. The highest effect occurs at the 10th percentile (β = 0.10) and diminishes toward the 90th percentile (β = 0.02, not significant), indicating that resource dependence drives environmental pressure mainly in early and intermediate development stages. The Driscoll-Kraay panel confirms a positive and significant mean effect (β = 0.06).
Policy implications include: (1) managing economic growth with stringent environmental regulations, (2) diversifying away from natural resource dependence through investment in sustainable infrastructure and renewable technology, (3) leveraging globalization to promote green investment and international environmental standards, and (4) tailoring policies according to pollution levels, recognizing heterogeneous impacts across quantiles.
Conclusion
This study demonstrates that N11 countries face significant environmental challenges despite rapid economic growth. The N-shaped EKC confirms that high-income growth may again increase ecological pressure. Resource dependence exacerbates environmental degradation, while globalization offers a pathway to mitigate such effects. Sustainable development in N11 countries requires coordinated policies balancing economic growth with environmental stewardship, strategic investment in technology, and intelligent use of global integration to achieve long-term ecological sustainability.
Keywords
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